Spotlighting ethics in business

No discussion of business will be complete without due consideration of moral values, which, in this context, are principles that are moral as well as prudential in terms of the benefits that they bring. In other words, it is doing business in an ethical and righteous manner.

It takes Herculean efforts to build a big business. Eventually, when the project attains fruition and fulfilment, the entrepreneur seeks a healthy balance between what he takes for himself and what he provides for other stakeholders. Companies that want to grow and continue on the ascending curve must, at the outset, enunciate a set of ethical values, which will be embraced by every employee — values such as personal and corporate integrity; meritocracy; and operating in a climate of mutual trust and goodwill.

The media prefer to paint corporate life in the gaudy colours of greed, hypocrisy, and moral laxity. Such stories are more spicy and newsworthy than the dull, drab, and dreary tales of dedicated hard work — the daily grind — that strives to elevate the life and lot of the common man.

The Biblical Book of Proverbs says: “A good name is more to be desired than silver and gold.” Good reputation is everything. There have been several cases of profiteering, rigging of markets, and abuse of political connections by the corporates. The paradox is that engaging in malpractice is anyhow destined to be discovered sooner or later.

Why? It is so much harder to maintain a web of deceit and dishonesty, than it is to operate above board. Satyam Raju and Telecom Raja are two recent examples.

Sheer business logic also demands that at the end of the day, the books must balance. All inputs and outputs must tally with each other. A company that does bad things will get a bad reputation. It will not attract good people to work with, nor will good people do business with it.

Building a good corporate reputation warrants adherence to some basic precepts.

The first principle is that even a simple statement made on behalf of the company — maybe verbally — must have the sanctity of a registered bond. Whatever has been agreed, written or unwritten, must be carried out willy-nilly.

Second, there must be openness and clear communication in corporate transactions. Any incomplete disclosure of facts is tantamount to concealment and deception.

Third, the company must deal with all the stakeholders in a fair and equitable manner. This is particularly pertinent where there is an imbalance of power — for instance, between the employer and the employee.

The best people flock to companies that do great things, both from an ethical and commercial standpoint. People in general feel passionate about their jobs, their careers, and their organisations. They want to be recognised and admired for being employees of well-known, reputed organisations.

A social conscience

In order to stay successful in business, companies must take extra efforts to maintain not only a moral dimension, but also a social conscience. Corporate Social Responsibility (CSR) is becoming a formidable factor in the current commercial milieu. The gap between the haves and the have-nots keeps increasing day-by-day. Business leaders all over the world are genuinely getting worked up as to how they can come up with enduring solutions to alleviate this malady.

Bill Gates and Warren Buffet in the US have diverted a large part of their personal fortunes to a charitable foundation that they have created, which is funding several worthwhile causes. The Tata Foundation in India, created by J.N. Tata, is one of the oldest corporate endowments in the world. Perhaps, it is the trailblazer and trendsetter for CSR in this part of the world. More recently, corporate barons in the IT industry, namely, N. R. Narayana Murthy of Infosys, Azim Premji of Wipro, and Shiv Nadar of HCL are in the forefront in this field.

There will always be people around the table whose interest will be focussed on their immediate personal gain or corporate profit. Towards that end, they will not demur to cut corners. They will even rationalise their stand in the most persuasive way. They will make things appear as palatable as possible from the moral and ethical point of view. Unless the CEO is totally alert, he will not see the wood for the trees, and that can be the start of a slippery slope.

Sometimes, there may be tough decisions to be taken that may vehemently impact on the company and its employees. When it is a clear-cut issue, the CEO has to do what is right for the business. His personal interest or the interest of any other constituency must necessarily take the back seat.

Trust and fairness

Trust and fairness are crucial ingredients in the life of a business. Of course, there may be dysfunctional or disaffected people in every organisation, but the majority of people are trustworthy. Trust is a two-way process. If the manager trusts his people, they will always trust him.

In order to generate this kind of high-voltage trust, there must be a strong culture of reliability and responsibility in the company, which will draw distinct lines of demarcation between what is acceptable behaviour and what is not.

It is by delegating authority and responsibility that a company can empower its employees. When people are empowered they take ownership of the tasks entrusted to their care.

The exercise of ethics in a constant and consistent manner creates a climate of dependability. The only difficulty in doing business in an ethical way is that there is usually a cost in the short-term. The pay-off is in the long term. When people cut corners, the pay-off is instantaneous, but the cost comes in the long term.

When a company comes forward on its own to facilitate free replacement of a defective product that has been inadvertently manufactured and marketed in thousands, there is a short-term cost. But the goodwill generated creates ripples in the market. Besides retaining all its current customers, the company attracts many more new customers into its fold.

(The writer, a former HR director of an auto components group, is a management consultant.)

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